Is it possible to get approved for multiple personal loans at the same time? Some Aussies may be faced with the situation of getting two loans at once or applying for another one while paying for a previously approved one.
It is possible to have two loans at the same time. You can pay for an ongoing mortgage and then apply for car financing. You can also apply for a mortgage while paying for car financing. Multiple loans are possible but there are conditions that govern such instances. Such conditions also vary depending on your bank or lender.
Two or More Personal Loans at the Same Time
Aussies are sometimes faced with financial situations that may require them to apply for a new loan even after being granted with one. You might need to apply for a medical assistance loan right after getting a loan for a birthday or wedding celebration. A second loan can assist you in financing a specific event or circumstance, however, your second loan might be riskier and more expensive than the first loan that you secured.
Some lenders or banks may allow you to take a second loan after paying a part of your initial balance on your first loan. However, this is not always a good idea. Here are some reasons why.
Second loans, on top of an existing loan do not offer the best deals possible for you. Lenders measure your capacity to pay for a loan. It is based mostly on your credit score and debt-to-income ratio. If you already have existing debt on your “things to pay list”, your APR and loan terms are affected, mostly on the negative side. You’ll most likely get a shorter payment term, a lower amount as your second loan and a high-interest rate.
Overborrowing is another factor that you might want to consider before applying for a new loan. Having too much debt will increase your monthly payments. Adding another loan on top of all those existing debts that you have will add up to your monthly amortizations and repayment needs – making it harder for you to repay your loan, not unless you generate more income than you used to do. It may start a cycle of debt if you do not put your finances in check.
How Do Multiple Loans Work?
Different banks and lenders have a varying set of conditions and rules when it comes to accommodating multiple personal loans. Although some do not entertain second loans at all. Here are some of the common conditions and eligibility criteria from banks and lenders that do allow second loans for their existing mortgage or financing clients.
- A second loan application is only allowed six months after the first loan take-out
- A credit score of not less than 640
- An active loan must be current and in good standing
- No late payments within 60 days prior to application
- No payments over 15 days late on the first loan in the last year
- Limited to a maximum combined loan amount (differs according to the lender)
Do You Really Need a Second Loan?
Again, applying and getting approved for a second loan is possible but is not advisable. A second loan may seem to be the best answer to your financial need at present but may affect your financial standing negatively in the long run. You might have a hard time borrowing in the future if you take that second loan. Too many inquiries on your credit report may make it hard to secure a mortgage or another personal loan in the future. Things will eventually get worse if you fail to repay these multiple loans. The possibility of getting hooked with a lot of debt is always there.
A loan is not always the solution to relieve you with your current financial problems. You might want to reassess your current financial situation instead. If you are constantly taking out a loan to cover every day or regular expenses, you might have to sit down and get professional help. A debt relief or a personal loan from a friend (without interests) might be a few options you may want to consider. A debt consolidation might also help.
Personal loans are mostly unsecured loans. Applying for a personal loan the second time around can lead to higher interest rates. Online lenders tend to see a greater risk in you as a client in such situations. Thus, your chances of getting the best deal for your unsecured personal loan are most likely impossible.
Several loans mean several monthly payments to worry about. Although lenders will not approve a loan you cannot afford, qualifying for one does not necessarily means that you’ll be able to repay those loans without hassles. If your financial situation changes – a better paying job, or an additional source of income comes into the picture – affording to repay multiple loans without hurting your budget and affecting your lifestyle is possible. However, unable to improve your financial resources with additional debts to worry about is not good for your personal finances.
Multiple Loans are Possible But Are Not Always Good
It is possible to take out a second loan even while repaying for one. However, most of the time, this could do more damage instead or repair on your credit file. An additional loan increases your debt-to-income ratio. It can also lead you to overborrowing or a never-ending cycle of debt. Additional fees and charges also comes together with a second loan, thus adding up to your regular monthly payments.
However, second loans or multiple loans are still beneficial. If your current finances can afford to take out another loan while paying for a first one, a second loan could indeed help you with your current circumstance. It would be ideal to talk with a loan specialist to know where you are at in terms of your chances and capabilities to repay a second loan.
Intellichoice can help you understand more of this. Call now and get the financial advice that you need.